The World's Best Dividend Portfolio
In June 2011 I invested my money equally in a selection of 10 high-yield dividend stocks. With a year of success behind me, in July 2012, I added even more money to the portfolio. Those names offer triple the yield of the average S&P 500 stock. You can read all the details. Now let's check out the results so far.
|Southern (NYS: SO)||$39.71||25.0818||4.3%||$1,138.21||14.3%|
|Philip Morris International||$68.49||14.5429||3.4%||$1,316.86||32.2%|
|Annaly Capital (NYS: NLY)||$17.79||72.5||12.7%||$1,245.55||(3.4%)|
|Frontier Communications (NYS: FTR)||$7.88||126.4243||8.6%||$599.25||(39.8%)|
|Plum Creek Timber||$38.42||26||4.1%||$1,058.20||5.9%|
|Brookfield Infrastructure Partners (NYS: BIP)||$26.12||38.2825||4.3%||$1,321.89||32.2%|
|Seaspan (NYS: SSW)||$14.90||76||6.2%||$1,289.86||4.5%|
|Retail Opportunity Investments||$12.20||81.95||4.4%||$1,028.47||2.9%|
|Annaly Preferred C||$25.92||38.5||7.4%||$990.61||(1%)|
|Investment in SPY (Including Dividends)||10%|
|Relative Performance (Percentage Points)||0.8|
Source: S&P Capital IQ.
Our portfolio was down slightly for the week, moving from 11% to 10.8% this week. We lost just a bit of ground on the S&P, moving from 0.9 points up to 0.8. Our blended yield remains at 5.8%, and we have quite a few dividends in the next couple weeks.
In fact, in about a month we'll have another $100, which I'd like to put to work immediately. I still really like the prospects for Seaspan, and it's currently the front-runner for more investment dollars, even though I just added some a few weeks ago. No matter. I think it has the brightest prospects of our portfolio stocks right now because of its low payout ratio and commitment to rapidly escalating its dividend.
Our portfolio's only preferred stock, Annaly's Series C Preferred, just went ex-dividend earlier this week. At the current price, it pays out an attractive 7.4% -- just don't expect much if any capital appreciation. As I mentioned when I bought the stock, I like it as a means to hedge the risk from Annaly common stock, as its dividend slowly declines, taking the stock price with it.
Are Annaly and our other holdings part of a dividend bubble? Fellow Fool Dan Caplinger discusses whether we're in a dividend bubble and what that means for us income investors.
Finally, one of the sharpest investors around, Gotham Capital, just recently sold its shares in Frontier. That follows recent insider purchases from Frontier's management in the mid- to low threes in recent months. Ultimately, I'm looking to unload Frontier as well and expect to do so in the coming weeks.
Dividends and other announcements
- Southern went ex-dividend on Aug. 2 and pays out $0.49 per share on Sept. 5.
- Plum Creek went ex-dividend on Aug. 15 and paid out $0.42 per share on Aug. 31.
- Exelon went ex-dividend on Aug. 13 and pays out $0.525 per share on Sept. 10.
- ROIC went ex-dividend on Aug. 14 and paid out $0.14 per share on Aug. 31.
- Annaly Preferred C went ex-dividend on Aug. 31 and pays $0.47 per share on Oct. 1.
- Brookfield Infrastructure went ex-dividend on Aug. 29 and pays $0.375 per share on Sept. 27.
All that, of course, means more money coming into our pockets.
It's fun to sit back and get paid, and with the market volatility, we might have a good chance to reinvest those dividends at good prices. Europe continues to be an absolute mess, and continued bad news will probably have stocks plunging again. If they do, I'll be inclined to pick more shares up.
Foolish bottom line
I've been a fan of big dividends for a while, and I think this portfolio will outperform the market over time through the power of dividends. I'll continue to track the portfolio over the course of the year, including news on these companies.
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The article The World's Best Dividend Portfolio originally appeared on Fool.com.Jim Royal, Ph.D., owns shares of the 13 portfolio stocks mentioned in the table. The Motley Fool owns shares of Seaspan, Brookfield Infrastructure, ROIC, and Annaly.Motley Fool newsletter serviceshave recommended buying shares of Vodafone, ROIC, National Grid, Brookfield Infrastructure, Exelon, Annaly, and Southern, as well as writing covered straddle positions on Exelon and Seaspan. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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